And in a letter to Dan Tucker of the Chicago American dated December 8, 1959, he has biting words on democracy, in general.

"A hundred years ago we all thought that Democracy was it. Neither you nor I probably think so now. It neither allows the ordinary man to control legislation nor qualifies him to do so. The real questions are imaginary issues. And this is all the easier because democracy always in the end destroys education."

Thursday, July 11, 2013

The first relies on inter-personal utility comparisons and goes like this: The marginal utility of a dollar is much higher for poor people than rich people, so in a utilitarian spirit, we can justify taking more marginal dollars away from the rich and giving them to lower income people.

Note that

(1) interpersonal utility comparisons are at best tricky and more likely impossible. We cannot rule out the case that the Sultan of Brunei gets more utility from another dollar than a slum dweller in Mumbai, and that in a utilitarian spirit, we should tax the slum dweller and give it to the Sultan!

(2) This is a case for redistribution, not for progressive taxes just to fund government generally.

(3) There is no reason for the argument to apply only inside national borders. Under the assumption of uniform diminishing marginal utility of money, we should be taxing poor Americans and giving it to the slum dwellers of Mumbai (or if we really have a utils machine, perhaps to the Sultan of Brunei).

The second argument is Rawlsian, and it goes like this: If we got together to set the rules of the game, without knowing what our socio-economic positions would be when the game was played (i.e. behind the veil of ignorance), we would all agree that rich people should be taxed at a higher rate and the money be redistributed to the poor.

Note that the same 3 notes above to argument #1 also apply equally here. We are taking uniform diminishing marginal utility of money as given, it's an argument for redistribution, not general funding, and, here even more than ever, it's a argument that should be applied globally.

Behind the veil, we don't know whether we'll be living in Norman Oklahoma, a slum in Mumbai or a palace in Brunei. The Rawlsian veil argues for higher taxes on most Americans with redistribution done on a global scale.

Now there's also the "you didn't build that" argument, but that seems more of a case that the rich should pay more taxes than the poor, which, certain extreme cases to the contrary notwithstanding, they generally do, and not a case for higher tax rates on the rich.

Amazing. Also totally unsurprising.Imagine filing your income taxes in five minutes — and for free. You'd open up a pre-filled return, see what the government thinks you owe, make any needed changes and be done. The miserable annual IRS shuffle, gone.

It's already a reality in Denmark, Sweden and Spain. The government-prepared return would estimate your taxes using information your employer and bank already send it. Advocates say tens of millions of taxpayers could use such a system each year, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate.

The idea, known as "return-free filing," would be a voluntary alternative to hiring a tax preparer or using commercial tax software. The concept has been around for decades and has been endorsed by both President Ronald Reagan and a campaigning President Obama.
"This is not some pie-in-the-sky that's never been done before," said William Gale, co-director of the Urban-Brookings Tax Policy Center. "It's doable, feasible, implementable, and at a relatively low cost."

So why hasn't it become a reality?
Well, for one thing, it doesn't help that it's been opposed for years by the company behind the most popular consumer tax software — Intuit, maker of TurboTax. Conservative tax activist Grover Norquist and an influential computer industry group also have fought return-free filing.
Intuit has spent about $11.5 million on federal lobbying in the past five years — more than Apple or Amazon. Although the lobbying spans a range of issues, Intuit's disclosures pointedly note that the company "opposes IRS government tax preparation."

"Government tax preparation"? Seriously? That's absolutely breathtaking. In Chile, they send you a bill. You pay the bill, or you can figure it out yourself and appeal it. Either way, it takes about 20 minutes.

Example 458: A nanny "bill of rights." The effect of which will be to make it impossible to hire nannies, forcing people to use much more expensive means of child care, all of which benefit unions and the health care cartel.

The world wants more Paco. But we are suffering a Paco shortage. To try to prime the pump, a poor substitute: Skippy the Wonderdog!

First, Skip was most unhappy that this little dog would not back down from his wonderfulness. Of course, the dog is actually a stone statue, so perhaps Skippy should cut the little guy some slack. (Photo credit: A.G.)

Second, this is Skippy in a thunderstorm. He tries to crawl inside the desk, and looks very unhappy while thunder happens. (This picture makes his head look enormous, but then, it is.)

So, a young woman buys some ice cream and some flavored sparkling water. Outside the store, two guys try to hassle her. She takes off in her car.

Turns out they were cops, or at least they were Alcohol Bev Control wanna-be cops. Of course, she had no way of knowing that, since their car was not marked, they were in street clothes, and they did not identify themselves. The story is here. Maybe it's not the cops' fault; there are too many laws.

Problem: it IS the cops' fault. They are using money from forfeitures and seizures to buy SWAT equipment, and this new command post. Remember, these are NOT REAL COPS, not even the ones buying SWAT equipment. They are just the guys who are still trying to enforce the 18th Amendment. Does anyone think this is actually worth all the money we spend on it? (You gotta like the part where it says "no taxpayer money, all from seizures." Nice. Police are self-financing now, from assets they steal from people who may, or may not have committed a crime. Interesting reading: Those right-wing nuts at ACLU have some good documentation.)

All you lefties, why don't you mention Europe now? You love Germany and France, etc for all those policies you admire. What about their drinking age? Europeans think we are a crazy, repressive, prudish society. And they are right.

Tuesday, July 09, 2013

If you are wondering if I am pleased with this pair of videos, the answer is, "Yes, ridiculously so. The second
video, in particular, will be something I will never forget. 'Seeeeea Pig! Seeeeeea Pig!"

Lind has a piece in Salon called Econ 101 is killing America (not making this up). Well, I just got done teaching Econ 101 this summer. Let's see how I did.

Here are some of Lind's claims of the country-killing myths that are taught in Econ 101:

1. All profitable activities are good for the economy.

Not guilty.

We spent a lot of time on externalities and how private and social incentives do not always coincide. We also talked about rent-seeking, lobbying, and the mess our financial sector had become by the 2007 crisis.

We discussed how economies of scale can make monopolies more efficient than a bunch of smaller firms. We had a chapter about Network goods and how the competition is for the market rather than in the market. We talked about how monopolies are often transient and about contestable markets.

3. Low wages are good for the economy.

Not guilty.

We discussed cross-country wage differentials pointing out how productivity differences (from differing amounts of physical and human capital) cause wage differentials on similar-seeming jobs. I pointed out how Mexico should be humiliated instead of bragging about how their wages were becoming lower than China's.

4. Trade is always win-win.

Not guilty.

We talked about the shortcomings of simple models which assume workers are homogeneous, have no preference over job type or location, and don't suffer unemployment or relocation costs when production patterns change.

5. Economics is a science.

Not guilty. Never discussed it one way or the other. Don't see any reason to in principles class.

There are 5 others, but I'ma call it quits for now.

All I can say is Mr. Lind should ask for his money back. Any econ 101 class which argued for the points discussed above is a misleading class that does not well-serve the students.

The Cowen and Tabarrok micro text I used is really good overall and excellent at dispelling myths 1-3 above, but I must confess a tinge of disappointment on its coverage of trade.

And then write new "NINJA" requirements, just like what was forced on banks during the explosion in mortgage "access" in the mid 00's. No income, no job, no assets required. All are welcome. After all, it's not OUR money!

It's rare that you see something so clearly scripted. It's like one of these scenes in an Ayn Rand novel, where you say, "Naw. Nothing could be that patently cynical. It's just not realistic."